Esusu cofounders Samir Goel and Wemimo Abbey.
Millions of Americans have lost jobs and missed rent payments due to the pandemic, a striking reminder of the looming financial duress many households are under. On Wednesday, the digital savings app Esusu, which targets immigrant and minority groups, announced the close of a $2.3 million seed round, bringing its total financing to $4 million.
Cofounders Wemimo Abbey and Samir Goel began fundraising in June and the latest round includes investors like Impact America Fund, Zeal Capital Partners, and Next Play Ventures, the latter of which is led by LinkedIn chairman and former CEO Jeff Weiner.
Founded in 2018, Esusu is a rotational savings and credit building app that allows users to pool and withdraw money for big-ticket transactions, such as a down-payment on a house. These purchases and the fulfillment of debt obligations are then reported to credit bureaus to help users establish or improve their credit profiles. The fintech company also doubles as a rental data reporting service by partnering with landlords, property managers, public housing authorities, and consumers to report tenants’ rent payment history, one of the most sizable and consistent payments for Americans.
Nearly half of Americans have poor or no credit scores, largely precluding them from gaining access to lending, housing, business creation, or employment opportunities and ultimately impeding their ability to achieve economic prosperity and financial well-being.
“We’re trying to address the fact that millions of people have a thin credit score or no credit score at all, while the average debt is around $135,000,” says Abbey who made Forbes 30 Under 30 list in 2019 along with cofounder Goel. “People are seeing the impact of what Esusu can do for their financial identity, which gives them a lot of leverage.”
Esusu
On average, credit scores are far lower or nonexistent for immigrants and Black Americans, a reflection of the racial wealth gap and discriminatory policies like redlining and predatory lending that have been leveled at these groups over the years. These longstanding economic disadvantages have created a vicious cycle of financial insecurity wherein marginalized communities need a strong credit score to grow wealth but lack access to the economic resources needed to build creditworthiness.
A number of lawmakers have pushed for a more comprehensive credit rating, one that uses utility payments and rent as alternative data for consumer credit reporting. Esusu’s cofounders champion these proposals. At the start of the pandemic, they surveyed users on their platform and found that 62% would not be able to pay their rent on time.
The two launched a rent relief fund in April and have raised nearly half a million dollars through an initial crowdfunding campaign and later, from the nonprofit impact investment fund Acumen and The Global Good Fund.
Applicants are vetted based on greatest need and must pay back the interest-free loans within 12 months. “The pandemic's disproportionately harmful impact on underserved communities has reinforced the importance of closing societal divides and ensuring that equal talent has equal access to opportunity,” says Weiner, founding partner at Next Play Ventures. “Esusu provides a foundational building block in making that a reality.”
More than 5,000 renters across the U.S. have applied for Esusu’s financial assistance and the fund has deployed about a quarter-million dollars. About 85% of applicants are Black, 7% are non-Black people of color and the remaining 6% are Caucasian, which Goel says is telling.
Many white families in the U.S. built wealth through the G.I. bill or first-time homebuyer loans, while Black families—and developers who wanted to create racially integrated communities—were barred from accessing similar loans or flat-out denied.
“People have succeeded economically in the U.S. through access to cheap debt, so the essential redress to that problem is helping Black folks get access to good credit so that they can get cheap loans and invest in homes and other products,” Goel says. “Social justice will take a lot of time but we can focus on economic justice and begin to help equalize wealth building.”
Esusu makes money from rent reporting by charging landlords $2 per unit each month. The value proposition for landlords is a 25% uptick in punctual rental payments and an amenity that they can use to lure new high-quality tenants or keep existing tenants who want to continue to build their credit.
“There’s a misconception that landlords are eviction hungry, but the reality is that evictions are super expensive and landlords would rather keep good tenants in a difficult time than evict someone and find a tenant,” Goel says.
Less than 1% of rental payments are reported to the major credit bureaus despite constituting the largest single monthly expenditure for American consumers and acting as a strong predictor of an individual’s credit risk.
“Our modus operandi centers on how we can help people achieve their financial best and we fundamentally believe that we can leverage our comprehensive tapestry of data to eliminate the racial wealth gap,” Abbey says.
Esusu currently operates in more than 30 states and covers over 200,000 rental units in cities like New York, Atlanta, Los Angeles, Minneapolis, Houston and Portland. It plans to expand across all 50 states within the next year and projects $1 million in revenue by year-end. With its latest capital infusion, Esusu plans to add new hires to its 25-person team.
